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Nobody likes to pay an annual fee for their credit card, which can be about $100 for a typical reward credit card, and up to $500 for a premium rewards card. Nevertheless, millions of credit card users have concluded that these can be worth it to enjoy the perks offered by many of these cards.
Here are some of the most valuable perks offered that can justify the payment of a credit card's annual fee:
Anyone who has flown on a commercial airline in the last few years has likely noticed that their business model has changed. These companies are no longer interested in winning your business by offering you the best quality of service. Instead, it's all about cutting costs and selling every possible add on. But in addition, it's also about offering some of these amenities back to holders with their co-branded business cards, often with steep annual fees.
For example, the United MileagePlus® Explorer Card from Chase has a $95 annual fee, but it is waived the first year and cardholders receive a free checked bag (and one for his or her traveling companion), priority boarding, and two free United Club lounge passes each year. The checked bag fee waiver alone can save $100-$200 in bag fees on just a single a round-trip domestic flight. The top of the line United Club card* from Chase has an annual fee of $450, but it also offers a United Club lounge membership as well as two free checked bags for the cardholder and one companion, plus priority security screening and priority baggage handling. Delta, American, and other airlines also offer co-branded credit cards with similar perks.
While holding an airline credit card can offer customers some of the perks granted to the most frequent travelers who hold elite status, many hotel credit cards immediately give you elite status as a benefit. For example, the Citi® Hilton HHonors™ Reserve Card offers instant Gold status to all cardholders, which features room upgrades, late checkouts, and even free breakfast. In addition, cardholders who spend $40,000 on their cards within a calendar year will earn Hilton Diamond status, their top tier. This elite status will be worth far more than the $95 annual fee when the value of the benefits has been considered.
Additionally, some airline credit cards offer credits towards elite status, including the Delta SkyMiles Platinum and Reserve cards from American Express, as well as the Citi®/AAdvantage® Executive World Elite Mastercard. While these cards have annual fees in the hundreds of dollars, in return, reaching the next tier of elite status can be worth thousands of dollars to travelers in the form of first class upgrades and fee waivers.
Airline Fee Credits
While it can be hard to quantify the value of priority boarding or late checkout from a hotel room, some credit cards offer airline fee credits that can save you an equivalent amount of cash. For example, the Citi Prestige® Card has a $250 annual airline fee credit that covers nearly any airline charge, largely offsetting the card's $450 annual fee. Other airline fee credit, credit cards include:
- $200 fee credit from the Platinum Card® from American Express, with its $550 annual fee
- $100 fee credit from the Premier Rewards Gold Card from American Express, with its $195 annual fee
- $300 fee credit from the Ritz-Carlton Rewards card from Chase
One of the features most commonly found on credit cards with annual fees are additional rewards. For example, the Blue Cash Preferred® Card from American Express offers 6% cash back on up to $6,000 spent each year at US supermarkets, 3% cash back at US gas stations and select US department stores, and 1% cash back on all other purchases, all with an annual fee of $95.
Another version of this card, the Blue Cash Everyday® Card from American Express, has no annual fee and only earns 3% cash back at US supermarkets, 2% cash back at US gas stations and select US department stores, and 1% cash back on all other purchases. The 3% difference in rewards at grocery stores is worth $180 in cash back each year for those who reach the annual maximum of 6%. The 1% difference at gas stations and department stores can be significant as well.
*Editorial Note:This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer Affiliate Program.
*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.
*The information related to United MileagePlus Club Card has been collected by CompareCards.com and has not been reviewed or provided by the issuer of this card.